What is the risk of applying a countywide price trend to a specific neighborhood?
Correct Answer
B) Submarkets can move differently from the aggregate
Why this is correct: The core concept is that aggregate data can mask local variations. A countywide price trend is an average of all its neighborhoods. A specific neighborhood may be appreciating faster or declining while the county average rises, making the county trend an unreliable adjustment for that neighborhood. The correct approach is to use the narrowest reliable data. Why the other choices are wrong: 'County data is generally recorded less accurately' is wrong; recording accuracy is not the primary issue. 'County trends may not be cited in appraisal reports' is wrong; they can be cited if appropriate. 'Aggregate trends are always smaller in magnitude' is wrong; they are not necessarily smaller. Exam tip: Remember the principle: use the most specific, reliable data available. 'Submarket' is the key word.
Why This Is the Correct Answer
Why this is correct: The core concept is that aggregate data can mask local variations. A countywide price trend is an average of all its neighborhoods. A specific neighborhood may be appreciating faster or declining while the county average rises, making the county trend an unreliable adjustment for that neighborhood. The correct approach is to use the narrowest reliable data. Why the other choices are wrong: 'County data is generally recorded less accurately' is wrong; recording accuracy is not the primary issue. 'County trends may not be cited in appraisal reports' is wrong; they can be cited if appropriate. 'Aggregate trends are always smaller in magnitude' is wrong; they are not necessarily smaller. Exam tip: Remember the principle: use the most specific, reliable data available. 'Submarket' is the key word.
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